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Updating the guaranteed power purchase agreement between power distribution companies and applicants / developing an executive method of participation in the construction or relocation of power plants

In line with the policies of the Ministry of Energy regarding maximizing the benefits of electricity generation from renewable sources (practical realization of saving fossil fuels and reducing greenhouse gases and environmental pollutants) optimal use of limited resources to strengthen renewable electricity generation, increase competitiveness in the industry and effective support for the endogenous development of the generation chain and supply of the renewable electricity industry (relying on domestic capability), principles for supporting the electricity generation from renewable power plants are described as following:

1. Renewable Energy and Energy Efficiency Organization is obliged to hold an auction to purchase electricity generated from renewable power plants in accordance with the terms of this paragraph.

1.1. The rate ceiling in the auction is equal to the average energy conversion component of the guaranteed purchase rate of electricity (per kilowatt hour) of small-scale generators in one month leading up to the auction date plus twenty percent.

Note: Tavanir Company is obliged to calculate the average price of energy conversion subject to this clause and announce it to SATBA by the fifth of each month.

1.2. The auction for the purchase of electricity will be conducted regardless of the site and the type of technology used in the renewable electricity generation and based on the auction mechanism used in the wholesale electricity market. Accordingly, SATBA is obliged to determine the winners of the auction based on the minimum bid price for the conversion of energy per kilowatt hour of electricity generated from renewable sources, according to the planning done to purchase the guaranteed amount of kilowatt hours of electricity. In this case, the bids submitted by investors for the total amount of planned kilowatt hours (during several years) will be received in each tender and their bid rate and amount will be the basis for determining the winners of the tender.

Note: In the call for auction, it should be specified that the points of fuel saving certificate, power plant capacity certificate and other rights related to the benefits of electricity generation from renewable power plants (which are defined and calculated within the framework of relevant laws and regulations) belong to the investor.

1.3. By determining the share of each producer during the contract years, during the purchase guarantee period, the energy produced will be purchased by SATBA. Extension of the contract period for guaranteed purchase of electricity is not allowed after the end of the contract period.

Note 1: Prior to the approval and implementation of the regulations for the delivery of saved fuel to the investor, SATBA is allowed to hold an auction for the guaranteed purchase of renewable electricity in accordance with the provisions of paragraph 2 of the decree. In this regard, the auction rate ceiling subject to the note of paragraph 2 of the decree shall be increased by a maximum of twenty percent to the weighted average of the rates stated in Article 2 of this enactment.

Note 2: In case the investor uses a second-hand wind turbine that has no domestic counterpart in SATBA auctions, the purchase guarantee period is limited to the remaining useful life of the main power generation equipment (according to the report of the selected SATBA’s judiciary expert) or will be ten years (Whichever is less).

2. Concluding a contract for purchasing guaranteed electricity from renewable power generation capacities with assigned capacities to a maximum 10 megawatt with average rate of 1.40 approved prices of enactment number 98.33560.20.100 within the following terms is unimpeded:
2-1. The maximum cash payment of the invoices in each period will be based on SATBA allocated budgets. The remaining payment of the demand of the renewable electricity seller (by registering the demands in payment information management and governmental demand website) will be dependent on the differences between governmental levelized and obliged prices or other allocated resources.
Note 1: The contracts of small scale power plants (rooftop PV systems) will not be included.
Note 2: The solar generator step with 100 kilowatts capacity and less will change into 200 kilowatts and less.
2-2. In case of concluding a contract according to this regulation, the privilege of fuel saving license, power station capacity license and other electricity generation related rights from renewable power plants (introduced and described within the related framework of laws and regulations) belongs to SATBA and any claim from the investors related to the privileges and rights will not be eligible.
Note 1: The Planning and Economic Deputy of Ministry of Energy with the cooperation of SATBA will provide and communicate the regulations related to releasing the privileges of this clause against reduction of commitments of guaranteed purchasing.
Note 2: In case of concluding contract according to this clause, power plant investors will be responsible to compensate power plant safe capacity reduction based on the determined regulations of the Ministry.
2-3. The tariff for all the subject power plants to this enactment except for wind power plants will be included in 3 steps reduction of purchase ratio (after adding all the other ratios) at the beginning of 8th , 12th, and 16th years. This ratio will be equal to 60%. The wind power plants will continue with the previous enactments.

2-4. In case of investor’s request, changing the basic rate and contractual conditions would be accepted for the contracts with maximum 10 megawatt capacities which were concluded before this announcement. In this case, if the power plant is operated with whole capacity, the beginning of using new rate and adjustment formula will be from the date of contract supplement exchange. Otherwise, the start of operation with whole capacity will be the base of adjustment formula. In case of more than 10 megawatt capacity, changing the base rate and contractual conditions of written contracts before this enactment will be accepted to the last rate extracted from auction and also the terms stated in the auction documents.
2-5. In case of changing the base fee and contractual conditions according to this clause, maximum time of acceptable period of constructing renewable and clean power plants, subject of regulation (6) with number of 98.33560.20.100 on and also hourly/seasonal ratios of regulation (3) of the announcement with number of 99.16883.20.100 and also commitment to clauses 2.1 and 2.5 is mandatory.
3. In order to fulfill the allocated missions to SATBA and with the aim of improvement of internal capabilities in forming the value chain of renewable electricity generation, SATBA must provide Ministry of Energy with a supportive program for technology development which are not yet in production commercial stage which supports research and development and also public - private cooperation models in order to reduce risk of changing production from research to commercial products within maximum six months since this announcement.
4. Regarding this announcement, SATBA is responsible for providing Ministry of Energy with required changes in samples of written contracts with the investors.
5. SATBA should provide investment clients with a general booklet of the regulations and conditions for purchasing electricity from private sector investors after the approval of the Ministry of Energy.
6. The rest of the regulations and conditions of Ministry of Energy for purchasing generated electricity from renewable power plant are valid and imperative.